Octopus Energy Kraken Spinoff Threatens London Stock Exchange With New York Listing

The future of Britain’s most valuable energy technology spinoff hangs in the balance as Kraken, the artificial intelligence-powered platform developed by Octopus Energy, evaluates whether to pursue a public listing in London or New York. The decision carries significant implications for the City of London, which continues to grapple with a concerning migration of high-growth companies to American exchanges.

Kraken has been demerged from Octopus Energy following a transaction that values the technology business at $8.65 billion, supported by $1 billion in fresh capital from new and existing investors. The platform, which now processes billing operations for approximately 55 million households globally and roughly half of all British homes, represents a substantial opportunity for whichever exchange secures its listing.

Greg Jackson, founder of Octopus Energy and a government adviser, articulated the challenge facing London in stark terms. The entrepreneur stated that Kraken must determine whether to position itself as a dominant player in London’s comparatively modest technology sector or accept a mid-tier status within New York’s substantially deeper capital markets. His comments reflect broader concerns about the London Stock Exchange’s diminishing appeal to high-growth technology enterprises.

The listing decision will hinge primarily on two critical factors: the sophistication and depth of analyst coverage available, and the quantum of investment capital accessible through each venue. Jackson emphasised that whilst he harbours a preference for a London listing, the commercial realities cannot be ignored. He challenged the London Stock Exchange Group to demonstrate greater initiative in attracting institutional capital and articulating a compelling value proposition to investors considering British equities.

Preliminary discussions have already commenced with the New York Stock Exchange, Nasdaq, and the London Stock Exchange. Amir Orad, who serves as chief executive of the newly independent Kraken entity, acknowledged the difficult choice ahead. He identified the concentration of technology companies on American exchanges as their principal advantage, noting that this concentration has fostered superior expertise among exchanges, investors, and analysts in evaluating technology businesses.

The potential loss of Kraken to New York would compound the London Stock Exchange’s ongoing difficulties in retaining premier listings. Recent departures include CRH, the building materials conglomerate, Flutter Entertainment, owner of the Paddy Power betting brand, and Wise, the financial technology firm. Each cited enhanced valuations and superior access to capital in American markets as motivating factors for their relocations.

The transaction structure reveals the extent of Kraken’s independence from its parent company. Octopus Energy will retain merely a 13.7 per cent stake in the technology platform, with Jackson relinquishing his board position entirely. This separation underscores the distinct strategic trajectories of the energy supply business and the technology platform that powers it.

Separately, Octopus Energy disclosed a net loss of £255 million for the year ending April, a reversal from the £83 million profit recorded in the prior period. Management attributed the deterioration to one-off charges and continued investment in expansion activities. The company maintains that its British supply operations generated an underlying profit despite reduced demand during an unseasonably mild spring.

The energy supplier has yet to satisfy financial resilience benchmarks established by Ofgem, the industry regulator. However, executives project that proceeds from the partial Kraken disposal, combined with additional capital injections into the supply business, will nearly double the group’s balance sheet strength. Jackson declined to specify the current shortfall relative to regulatory requirements or provide a timeline for compliance.

A spokesperson for the London Stock Exchange defended the institution’s efforts, emphasising collaborative work with government bodies, regulators, and investors to ensure companies can access necessary capital throughout their development stages. However, such assurances may ring hollow without tangible evidence of improved conditions for technology listings.

The Kraken situation encapsulates a fundamental challenge confronting British capital markets. Without addressing structural disadvantages in market depth, valuation multiples, and investor expertise in evaluating technology enterprises, London risks becoming increasingly marginalised in the competition for transformative businesses. The stakes extend beyond individual listings to encompass the broader competitiveness of Britain’s financial services sector and its capacity to support domestic innovation.